*Market Wrap: 13/04/2017 (19:00)*
*NSE-NF (April): 9180 (-43 points; -0.47%)*
*NSE-BNF (April): 21750 (+40 points; +0.18%)*
*IN 10Y G-SEC: 6.820 (+0.56%)*
*USDINR (Apr): 64.52 (-0.40%)*
*For 17/04/2017:*
*Key support for NF: 9160-9115*
*Key resistance for NF: 9235-9280*
*Key support for BNF: 21640-21500*
*Key resistance for BNF: 21775-21875*
*Time & Price action suggests that, Nifty Fut (Apr) has to sustain over
9280-9315 area for further rally towards 9375-9425 & 9465-9505 in the
short term (under bullish case scenario).*
*On the other side, sustaining below 9260-9235 area, NF may fall towards
9160-9115 & 9085-9035 area in the short term (under bear case scenario).*
*Similarly, BNF has to sustain over 21825 area for further rally towards
21875-21975 & 22050-22150 area in the near term (under bullish case
scenario).*
*On the other side, sustaining below 21775 area, BNF may fall towards
21640-21500 & 21340-21150 area in the near term (under bear case scenario).*
Nifty Fut (Apr) today closed around 9180, down by 0.47% after making a
day high of 9222 and late session low of 9177. Indian market today also
opened gap down on the back of ongoing geopolitical tensions with
NK/Syria & USA. Risk trade was off also after Trump’s comment yesterday
that USD is “overvalued” and his intentions for a lower Fed rate &
dovish sets of FOMC members. Trump also commented that US will not
officially level China as a “currency manipulator” in exchange of
China’s help to diffuse NK issues and a better trade deal with US (Trump
is truly a hardcore businessman !!). All these geopolitical issues &
Trump’s effort to talk down the USD has made the risk trade off and USD
is being sold across the board, being a reflation/risk currency as of now.
Amid all these ongoing global concerns, domestic market also turned
cautious after Infy delivered another poor set of earning numbers for
Q4FY17. Although, overall result of Infy may be at par with market
expectations, the guidance for FY-18 was slightly below consensus and
thus it failed to convince the market today despite probable buy back of
shares in the coming days. The stock corrected further by around 4% on
top of last few days decline & closed around 930 today. *Looking ahead,
technically 900 zone may act as a strong positional support for Infy;*
otherwise it may correct more as the overall macro picture for the
Indian IT outsourcing co may be quite gloomy now on the back of various
headwinds like a weak USDINR, technological obsolesce, Trump’s policy of
“America First” and similar nationalistic politics elsewhere, such as in
UK.
Indian market sentiment was further affected due to poor IIP & CPI data
released yesterday after market hours. Also, actual implementation of
GST scheduled from July’17 with so many categories of taxes, regulations
& complexities may be also proved as a short term disruption for the
Indian economy, especially large portion of the trading & business
community may be underprepared with time & IT constraint.
There is also some apprehension about El-Nino effect on Indian monsoon
this year and all such headwinds including probability of another
quarter of tepid earnings & overall growth (GDP) may be affecting the
market sentiment adversely. As par Nomura, Q4FY17 GDP may have fallen
below 7% at 6.7%.
Apart from Infy & some other IT scrips, Nifty was also dragged today by
metals, telecoms & cement counters; but supported to some extent by
PSBS, RIL & BPCL.
The recent rally in Nifty may be supported largely by RIL, LT & Tata
Steel and some PSBS apart from market optimism about some big bang
reforms by the Govt amid huge political support. Also, better than
expected Q3FY17 GDP figure and some other soft & hard economic data,
despite DeMo blues may have supported the market to a great extent. But
all these need to be reflected in the report card (earnings), which is
so far not as optimistic as the rapid expansion of valuation multiples.
Thus, reality of the earnings may catch the market off guard, which is
rallying relentlessly for the last few months, basically on the hopes of
earnings upgrade in FY: 18-19. For Nifty, average CAGR of EPS for the
last few years may be below 7%, where as valuation multiples (PE) has
expanded quite rapidly over the last few months as market is assuming an
EPS growth of 15-25% for Nifty over FY: 18-19; for this Q4FY17 & Q1FY18
earning growth visibility may be vital; otherwise we may again see a
typical mid-year downgrade of earnings on the back of some excuses.
At, 9300 Nifty and consensus FY-17 Nifty EPS of 395-410 (against actual
FY-17 EPS of 370 & Q3FY17 EPS of 385), TTM PE may be around 23.55-22.68,
which may be still on the higher side & quite stretched.
*Technically, whatever be the narrative, Nifty has to sustain over 9315
area for further rally towards 9500-9550 in the coming days; otherwise
it may correct towards 8725-8650 area, if closed consistently below 9000
zone. *
<https://4.bp.blogspot.com/-qYRFcGRqTjQ/WO-OKWzCwyI/AAAAAAAALUk/qqB1l6JJMvQ1aKropoEZ0qUDYCSuHCrmACLcB/s1600/SGX-NF-PATTERN-13-04-2017.png>
SGX-NF
<https://3.bp.blogspot.com/--kVvAUyQFRQ/WO-OMhMw1gI/AAAAAAAALUo/QT0sKFpz0X4p1D3L4IWWuWBYQDuEx8dFgCLcB/s1600/BNF-PATTERN-13-04-2017.png>
BNF
--
Thanks & Regards,
Asis Ghosh
--
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